Tonga's Fisheries Sector is to be exempted from the 15 percent Consumption Tax on sales, the Prime Minister, Lord Tu'ivakano told a gathering at Tu'imatamoana Wharf on Tuesday, 9 April.

At the same time a government fund originally set up to help agricultural exporters by the Minister of Finance, Hon. Lisiate  'Akolo, would be reallocated to the Ministry of Agriculture, under Hon. Sangster Saulala, to help increase agricultural production.

The Prime Minister said that the Cabinet decision to offer these initiatives to the Fisheries and the Agriculture sector, "emphasized the commitment of government to reviving the struggling Tongan economy".

The World Bank has predicted a half of a percent growth for the Tongan economy in the coming years.

Individuals in the Fisheries Sector welcomed the announcement and hailed it as a success to their plea to government for tax exemption, to be in line with what government had offered the Agriculture Sector and the Tourism Industry in the past.

New group

The Tu'imatamoana meeting was hosted by a new group, the Tonga Economic Growth Council (TEGC), made up of individuals from the Fishery and Agriculture sectors, and the Tourism industry.

The TEGC, according to one of its members Teisina Fuko, has not been officially formed, but it has brought together individuals from the Tourism, Agricultural and Fisheries Sectors. They include Saia Moehau, Tu'i Uata, 'Eti Palu and others. He said that the invitation to the Prime Ministers and members of parliament to the announcement of the tax exemption on 9 April was a move by people from these industries to be recognized by government, so that they could effectively pressure government to take firm action to revive economy.

He said that, tentatively, the TEGC has a broad agenda, including the managing of the fisheries wharf and the Tu'imatamoana Fish Market, and the establishment of an auction facility for Tonga's niche fisheries products such as Sea Cucumber.

Consumption Tax Act

Teisina Fuko, is a former Minister for Revenue Services who was responsible for administering the Consumption Tax Act.

He said that the exemption offered by government would help revive the fisheries industry, which has fallen apart, as shown by the number of fishing boats which had been abandoned to sink at Faua Wharf and on reefs at Nuku'alofa Harbour.

The former taxation leader believed that most beneficial to the fishermen is the tax exemption on fuel, new boats, and motor parts.

National Fisheries Council

Meanwhile, Semisi Fakahau, a former senior officer with Tonga's Ministry of Fisheries, who is currently working as a fisheries consultant with the Fisheries Division of the Ministry of Agriculture and Fisheries, said that the proposal for government to exempt the Fisheries Sector from Consumption Tax was, in fact, initiated by the National Fisheries Council in cooperation with the National Growth Committee, a committee that was formed following the National Economic Dialogue that was held in March 2012, hosted by the National Reserve Bank of Tonga.

Semisi was very surprised to hear of the proposed mandate of the TEGC, and admitted that he had never heard of the new council until he was invited to attend the meeting on 9 April.

With regards to the management of the fisheries wharf and the Tu'imatamoana Fish Market, Semisi said that it is the responsibility of the National Fisheries Council, as approved by Cabinet, and for the meantime the Council is still negotiating with the Nuku'alofa Harbour Board Authority on the boundaries.

Traditional sectors

The intention of the March dialogue, according to the Governor of the National Reserve Bank, Siosi Mafi ". . . to focus on the three traditional sectors of agriculture, fisheries and tourism, to identify how they can dismantle the blocks to allow these sectors to realize their full potential."

During the dialogue it was also revealed that the flow of foreign remittances to Tonga was declining by $82 million annually since 2008, and agricultural and fisheries exports had also declined by about 70 per cent.

Proposed mandate

A spokesperson from the Ministry of Finance expressed her surprise when she was told of the Tonga Economic Growth Council and its proposed mandate.

She pointed out that the Cabinet decision to extend a tax exemption to the Fisheries Sector was based on proposal from the National Fisheries Council, and the National Growth Committee, which is headed by the Secretary for Finance, Tiofilusi Tiueti.

She said that though the Tax Exemption was a Cabinet Decision and it can be implemented but it has to be enacted by parliament.

(Under the new system of government, a Cabinet Decision is similar to the former Ordinance of the former King in Council. It can be enforced once is passed by the Cabinet but it has to be enacted by Parliament in their next session).

Reallocation of funds

She said that the reallocation of a portion of the $1 million Agricultural Export Marketing Fund that has been managed by the Ministry of Finance and to give it to the Ministry of Agriculture was a new development.

"The Agricultural Export Marketing initiative is still in progress and out of the 11 applicants three were approved. A portion of the $1 million has been allocated to two of the three approved applicants, and the third one has been scheduled to starting exporting soon".

The spokesperson for the Ministry of Finance said that one of the two applicants that the ministry had lent money to was having a bit of a problem with the packaging of their product for the overseas market.

The Agricultural Export Marketing Fund aimed at providing short term loans to exporters who buy exportable produce from farmers. Three agricultural produce exporting companies have been selected to access the funds. Produce that the fund will give priority to are taro, tapioca, watermelons, and yams.

The three agricultural produce exporters who had been selected to access the fund were the Pacific Exotic Foods, Hammah Consulting and the Young Farmers Federation Ltd.